NFIB Fights to Protect Property Rights in California

Author: Michelle Orrock Date: April 15, 2014

The National Federation of Independent Business (NFIB) Small Business Legal Center has joined with the Pacific Legal Foundation (PLF) in filing an amicus brief in City of Perris v. Stamper. This case raises fundamental questions as to how commercial property owners should be compensated in eminent domain actions, which is of great practical concern to small business owners.

“For many small-business owners, property is essential to their livelihood and the success of their business,” said John Kabateck, NFIB CA State Director. "A small business owner should have the right to just compensation when a city exercises eminent domain in order to take his or her property. We are committed to ensuring that all small business owners get a fair shake when the government gets involved in their business and they suffer a taking.”

“This case is an issue of tremendous importance to the small business community because it raises fundamental questions as to how commercial property owners should be compensated in eminent domain cases,” said Karen Harned, Executive Director of NFIB’s Small Business Legal Center.  “The outcome of this case is important for small businesses owners because they have often invested substantial personal assets into their property and business. As such, when the government chooses to exercise the power of eminent domain, these owners are placed in a vulnerable position. We urge the Court to rule in favor of the small business landowner here.”

Richard Stamper co-owned 9 acres of vacant, industrially-zoned land in the City of Perris.  In 2009, the City filed an eminent domain action to acquire the property needed for a 94-foot wide truck route running through the middle of the Stampers' property.  The City determined that the Stampers would have been required to dedicate the truck-route property as a condition of any future development and therefore appraised the take as undevelopable agricultural land. A trial court found that the dedication requirement was constitutional and reasonably probable to occur.  The court of appeal reversed the trial court decision.

In their joint-brief NFIB and PLF argue that the “project influence rule” should prevent the City from devaluing the Stamper property. This rule holds that government cannot undercompensate property owners in eminent domain cases simply by virtue of the fact that eminent domain proceedings have caused property values to plummet. NFIB and PLF argue that the City is trying to get around the project influence rule by insisting that it would not have approved development on the property without requiring dedication of the land it seeks to take. And further, the joint-brief argues that the City’s hypothetical dedication requirement would be unconstitutional.

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